Inefficiency of the Profit-Maximizing Quantity (Qp)
The output level selected by a firm to maximize its own profit (Qp) is demonstrably not Pareto efficient, a conclusion that holds even in cases where numerous Pareto-efficient allocations are possible. [1] This can be formally shown by applying the conditions for Pareto efficiency to the specific quantity where production equals the profit-maximizing level, Q = Qp.
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